Boom time for industrial property sales

Industrial real estate is back in vogue, with Australia’s eastern states enjoying a multi-billion dollar surge in property sales.

Melbourne, Sydney and Brisbane amassed $4.46 billion in industrial property deals over the 12 months to June – a 45% increase on the five-year average, according to new Savills data.

There were 301 properties worth more than $2 million sold across the three markets in the past year, up from 244 properties the previous year and 26% more than the average over the past five years.

Sydney secured the lion’s share of industrial sales, racking up $2.4 billion from 84 properties, which was $658 million more than the last financial year and $860 million more than the five-year average.

It’s a good news story for the eastern states at a time when other states, especially WA, are struggling to deal with the end of the mining boom

Melbourne’s 144 industrial sales totaled $1.422 billion, a significant jump from the five-year average of $905 million and a small improvement over last year.

Savills national head of research Tony Crabb says the results were confirmation of reports of a significant increase in the number of properties hitting the market in the past year.

Industrial properties have been highly sought after over the past year

“These are the sort of figures that we were expecting based on our anecdotal evidence. It’s a good news story for the eastern states at a time when other states, especially WA, are struggling to deal with the end of the mining boom,” he says.

Brisbane was the surprise packet, recording a small growth in sales despite grim predictions for the northern state’s commercial market. It chalked up $647 million in industrial transactions, up $44 million on 2013-14.

Crabb says Brisbane’s positive result was indicative of a market that wasn’t as reliant on mining as has been suggested.

Leasing is still down on the five-year average but at only eight per cent below it’s encouraging

“A common misconception is that the Brisbane market is heavily dependent on the mining sector, whereas Brisbane has a much more diverse economy and that is reflected in these latest investment figures,” he says.

The news was less buoyant for the industrial leasing market, with Brisbane, Sydney and Melbourne leasing a combined 1.87 million square metres over the last 12 months, a tiny increase on the 1.86 million square metres leased the previous year and down from 2.02 million over the past five years.

But Crabb says the result was still a cause for optimism. “Leasing is still down on the five-year average but at only eight per cent below it’s encouraging and the trend in our three largest cities is upward,” he says.